Small Business Lending Fund helps to increase capital to small businesses

January 22, 2013 at 11:22 am

The U.S. Department of Treasury published a report looking at the impact of the Small Business Lending Fund (SBLF), which was established as a part of the Small Business Jobs Act of 2010.  The SBLF is a $30 billion fund that provides capital to community banks (with assets less than $10 billion) to increase their small business lending.  The program has allowed the Department of Treasury to invest over $4 billion in 332 institutions.

The report shows that participants in the SBLF have in fact increased their small  business lending by $7.4 billion over a baseline of $36.5 billion. Three-quarters of the participants in the program have increased their small business lending by 10 percent or more. When compared to other similar institutions, SBLF banks have seen much greater increases in their outstanding loans– 32.3 percent increase, compared to 5.7 percent for banks within their peer groups, and 2.1 percent increase for banks that are in a broader comparison group.

The Charlotte Observer reports that North Carolina institutions saw an increase of $205.3 million in small business lending through funding provided by the SBLF. There are seven North Carolina banks that have participated in the SBLF program, some of which have seen significant increases in their lending to small businesses. Live Oak Bancshares out of Wilmington, which received $6.8 million from the SBLF, saw an increase in small business lending of almost 130 percent. Select Bancorp from Greenville, which received $7.7 million, saw an increase of about 60 percent.

This is all good news for small businesses and for community banks. The SBLF is not only expanding access to capital when the larger banks have receded from lending, it is also providing support for smaller, alternative lenders. In the landscape of small business lending, as the big banks continue to pull back and as the market continues to tighten, other community based lenders and banks will be stepping in to provide services and resources. Community banks, community development financial institutions (CDFIs), and credit unions will play a larger role in small  business lending. It is encouraging that federal programs such as the SBLF are having a positive impact.

 

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Entry filed under: Banks, CDFI, Credit Unions, Economic Development, Economy, Small Business. Tags: , , , , , , , .

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